Business

Brady offers amendment preserving adoption tax credit

House Ways and Means Chairman Kevin Brady (R-Texas) is offering an amendment to the House GOP tax bill that makes a number of changes, including additional tax relief for small businesses and preservation of the adoption tax credit.

Brady said the amendment “takes action on three crucial priorities — helping American families, providing tax relief to Main Street startups and increasing American competitiveness.”

The amendment comes after the National Federation of Independent Business (NFIB) came out against the initial version of the bill because they thought it did not help enough small businesses.

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The initial bill lowered the top rate for “pass-through” businesses, which includes many small businesses, from 39.6 percent to 25 percent. Small businesses otherwise would have been taxed at the regular individual tax rates.

Under Brady’s amendment, there would be a new 9-percent bracket for the first $75,000 of taxable income for active owners that earn less than $150,000 from a pass-through business. The 9-percent rate would be phased-in over five years. 

The amendment also preserves a nonrefundable tax credit for adoption expenses. Many conservatives had opposed the bill’s initial repeal of the adoption tax credit.

The amendment also makes changes to the tax rates at which businesses would repatriate the foreign earnings they currently are holding overseas. The new rates would be 14 percent for liquid assets and 7 percent for illiquid assets, up from 12 percent for liquid and 5 percent for illiquid in the original bill.

The amendment also would narrow the time period for the bill’s scale-back of the Johnson Amendment. Under the amendment, churches and other nonprofits with 501(c)(3) tax-exempt status would be able to engage in political speech from 2019 to 2023. The initial bill would not have had a sunset date but would have only applied to houses of worship, rather than all 501(c)(3) organizations.

The amendment also would require taxpayers to provide a Social Security number for a child in order to claim the full child tax credit. It also makes changes to the rules aimed at preventing erosion of the U.S. tax base.

The amendment is notably missing a repeal of the ObamaCare individual mandate, which President Trump and some conservative lawmakers have been pushing for.